The federal production tax credit (PTC) is set to expire at the end of 2012. The PTC, which is an important economic incentive for developers, provides wind farm owners with a 2.2 cent per kilowatt tax credit for wind power generated during the first ten years of a facility’s operation. The impending expiration is causing a boom in the construction of wind farms because, in order to qualify for the tax credit, wind farms must be operational by December 31, 2012. The American Recovery and Reinvestment Act of 2009, which extended the PTC , also allows wind farm developers to take a grant equal to 30% of the capital cost of its wind farm in lieu of the tax credit. In order to qualify for the grant, wind farm construction must begin by December 31, 2011.
In years when the PTC was allowed to expire temporarily (1999, 2001, and 2003), the amount of wind capacity built the following year dropped between 73% and 93%. There are no guarantees that the PTC will be extended again once it is allowed to expire in 2012.